Yahoo Finance Results: Element Solutions Inc Beat Earnings Expectations And Analysts Now Have New Forecasts
Element Solutions Inc (NYSE:ESI) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$575m, statutory earnings beat expectations by a notable 44%, coming in at US$0.23 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Element Solutions
Taking into account the latest results, the current consensus from Element Solutions' eight analysts is for revenues of US$2.42b in 2024. This would reflect a credible 3.7% increase on its revenue over the past 12 months. Per-share earnings are expected to climb 13% to US$0.60. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.44b and earnings per share (EPS) of US$0.80 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
The consensus price target held steady at US$27.78, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Element Solutions at US$30.00 per share, while the most bearish prices it at US$25.00. This is a very narrow spread of estimates, implying either that Element Solutions is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Element Solutions' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.9% growth on an annualised basis. This is compared to a historical growth rate of 7.2% over the past five years. Compare this to the 126 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.8% per year. Factoring in the forecast slowdown in growth, it looks like Element Solutions is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$27.78, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Element Solutions going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Element Solutions you should be aware of, and 1 of them makes us a bit uncomfortable.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
